The Employment (Amendment) (No.2) Ordinance 2018 (the "Amendment Ordinance") was passed by the Legislative Council on 17 May 2018 and gazetted on 25 May 2018. The Amendment Ordinance provides for the Labour Tribunal to order compulsory reinstatement or reengagement of an employee in the event of unlawful termination and it is reasonably practicable to do so. The Amendment Ordinance will come into effect on a day to be appointed.

Under the Employment Ordinance (the "EO"), unreasonable and unlawful dismissal refers to the situation where an employee is dismissed other than for a valid reason and is in contravention of the EO. Valid reasons for dismissal include the conduct of the employee, the capability or qualifications of the employee for performing his or her work, redundancy or other genuine operational requirements of the business, compliance with statutory requirements, or other substantial reasons. On the other hand, dismissals in the following circumstances contravenes the law:

dismissal of a female employee who has been confirmed pregnant and has served a notice of pregnancy to her employer;

dismissal whilst the employee is on paid sick leave;

dismissal by reason of an employee giving evidence or information in any proceedings or inquiry in connection with the enforcement of the Employment Ordinance, work accidents or breach of work safety legislation;

dismissal of an employee for trade union membership and activities; or

dismissal of an employee entitled to compensation under the Employees' Compensation Ordinance (Cap. 282) before having entered into an agreement with the employee for employee's compensation or before the issue of a certificate of assessment.

Before making such an order, both the employer and the employee must be given an opportunity to present each of their cases in respect of the making of an order for reinstatement or reengagement. The court or the Labour Tribunal must take into account the circumstances of the claim before making such order, including:-

the circumstances of the employer and the employee;

the circumstances surrounding the dismissal;

any difficulty that the employer might face in the reinstatement or reengagement of the employee; and

the relationship between the employer and the employee, and between the employee and other persons with whom the employee has connection in relation to the employment.

The court or Labour Tribunal may also, upon the agreement of both the employer and the employee, request the Commissioner to provide a report containing information that (1) relates to the circumstances of the claim and (2) such information was obtained in connection with conciliation held under the Labour Tribunal Ordinance (Cap. 25).

Upon an application by the employer, an order for reengagement may be varied such that engagement of the employee by a successor or associated company of the original employer is to be treated as reengagement by the original employer in compliance with the order. An order of variation will only be made if the court or the Labour Tribunal is satisfied that the terms on which the alternative employer is to engage the employee are comparable to the terms of the original employer.

If the employee is reinstated, the continuity of the period of employment between the date of the employee's absence from work and the date of reengagement is not broken and the employee's existing and future entitlements under the EO and the employment contract will continue to be recognised. The court or the Labour Tribunal may also, if it considers just and appropriate, order the employer to pay the employee any arrears of pay and statutory entitlements under the EO which the employee would have accrued if he has not been dismissed or the employment contract has not been varied. Conversely, the employee may be ordered to pay the employer any amount that the employer has paid him because of the dismissal or the variation of the employment contract.

If the employee is not reinstated on the terms specified in the order, the employer is required to, on top of the usual terminal payments and compensation, pay the employee a further sum set at three times the employee's average monthly wages subject to a maximum of $72,500. This amount is on top of the usual terminal payments and compensation payable to the employee as currently provided under the EO. An employer who wilfully and without reasonable excuse fails to make such further payment also commits a criminal offence and is liable on conviction to a fine of $350,000 and to imprisonment for three years.

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